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How to Buy Stocks — Consider the Economic Conditions
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Consider the Economic Conditions

Consider the Economic Conditions

How the overall economy is doing can determine which sectors or companies to invest in.

For example, when the economy is coming out of a recession and is heading towards brighter times, companies such as product retailers may become an attractive investing opportunity. This is because consumers tend to spend more when they have higher confidence in the economy.

Investments that do well in good economic environments and poorly in bad economic environments are known as cyclical businesses. Investments that perform well in down markets are referred to as counter-cyclical.

Take for example: companies in the utility sector are often considered counter-cyclical. Since they offer products that can be considered as basic necessities, they’re able to maintain their revenues irrespective of the market environment.